A major deal was announced today that sent Cronos flying.
Cronos (CRO 28.99%) is flying higher on Tuesday, up 24.9% in the last 24 hours as of 1:38 p.m. ET today. The spike comes as the S&P 500 and the Nasdaq Composite are little changed.
Cronos, the token of the major exchange Crypto.com, is jumping after news broke that Crypto.com and Trump Media & Technology are teaming up to create a new company that will acquire Cronos.
Trump Media will add Cronos
The parent company of Truth Social, Trump Media, will partner with Crypto.com to create a new entity that will be taken public via a SPAC deal. The entity will merge with Yorkville Acquisition and be listed under the ticker MCGA. The deal is funded with $1 billion in CRO tokens, $200 million in cash, $220 million in warrants, and an equity line of up to $5 billion from a Yorkville affiliate.
As part of the deal, Trump Media will purchase around $100 million in Cronos to add to its own books, while Crypto.com will buy roughly $50 million in Trump Media stock.
The deal to accumulate Cronos mirrors the same strategy by Trump Media to accumulate Bitcoin on its own books, which the company modeled after a strategy that was pioneered by Michael Saylor’s MicroStrategy (doing business as Strategy). However, this deal is unique in that the target asset is a relatively minor altcoin at least in comparison to Bitcoin or Ethereum, which most other companies have targeted to this point.
Image source: Getty Images.
While the news led to a rush of investors purchasing Cronos, I would stay away from this token for now. There is likely to be a lot of volatility around this deal, just as there is a lot of volatility around Trump Media stock. If you’re interested in investing in cryptocurrency, stick to Bitcoin or Ethereum.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.